Huge boost for plan to cut pension benefits in Brazil

World Today

In Brazil, a huge boost for the campaign to cut pension benefits — Brazil’s lower house of Congress has approved a constitutional amendment needed to make the changes. But the bill still faces a number of hurdles before becoming law. CGTN’S Lucrecia Franco has details.

Brazil’s lower house of congress approved Wednesday, in a first-round vote, a constitutional amendment to overhaul the country’s pension system.

The bill, President Jair Bolsonaro’s flagship economic proposal, is expected to shore up the country’s finances.

But protesters took to the streets of Brazilian cities that same night waving signs that read “We want to retire”, a reference to Brazil’s controversial pension reform.

Meanwhile, the lower house of congress, voted by an overwhelming majority of 379 votes to 131 to pass the long-awaited constitutional amendment to overhaul Brazil’s pension system.

Considered a victory for Brazil’s President Bolsonaro, the measure is expected to save the government around 236 billion dollars over the next

According to Vilma Pinto, an economist at Getulio Vargas Foundation, the current pension obligations were consuming most of the budget. “Today, the federal government spends 57 percent of its budget on pensions and social security benefits. A reform was necessary, but it will not be enough. It will only keep expenditures from growing,” Pinto said.

Under the new system, the minimum age to retire in Brazil would be set at 62 for women and 65 for men. Full pensions would only be paid after 40 years of contribution. These changes would be implemented over a 14-year transition period.

Though unpopular, supporters of President Bolsonaro held rallies in several cities last month, to back the reform. The perception of the economy is so bad that it produced a rare phenomenon: people asking to cut their own pensions.

“People realized that is very important to reform the pension system, even it is very difficult for many people, and this is also a good sign for foreign investors. It may open the Brazilian market for many people abroad who will feel more comfortable with the state of the Brazilian economy,” said Mauricio Santoro, a political analyst and a professor at Rio de Janeiro’s State University.

After months of political drama, the measure passed with unexpectedly ease. Because it is a constitutional amendment, the bill will need approval by a second vote in the lower house, and two more votes in the senate, to become law.